Despite the IMF’s stance toward crypto, the agency has acknowledged the usefulness of digital assets. The organization believes digital assets could become an alternative to conventional financial products.
In June, the IMF (International Monetary Fund) published a blog post citing the usefulness of cryptos and CBDCs. It believes they can be more effective for payment purposes than physical cards.
The IMF stated that:
“CBDCs and certain digital assets have great potential for use for payment purposes. They can do better than the debit and credit cards we have presently. However, this would depend on the consensus mechanism they are using. They can use less energy with a proper mechanism than physical cards.”
Furthermore, the IMF noted that central banks are thinking of creating physical cards for CBDCs. However, these central banks must have a plan to reduce energy consumption.
Integration Of Cryptocurrencies And Card Payment
According to the organization, integrating CBDCs and crypto with cards will increase mass adoption. Using debit or credit cards, users can easily pay for products and services physically and online.
The monetary organization acknowledged that money in the future would be different. However, it implores policymakers to consider the energy consumption of crypto and CBDCs.
This is because energy consumption is central to determining what money will be in the future. In June, the IMF encouraged countries to adopt eco-friendly crypto and CBDCs.
However, the agency note that PoW digital currencies such as BTC consume more energy. The IMF said its energy consumption is more compared to credit cards.
As a result, it recommends the adoption of digital assets that use the Proof-of-stake mechanism. It believes this would put the energy usage of crypto below credit cards.
IMF Issues Caution On Digital Currency
Before now, the IMF stated that the widespread adoption of digital currencies threatens financial stability. Therefore, the organization warned for quick adoption of regulations for the industry.
According to Finbold, the organization issued guidelines to create a uniform regulatory framework for crypto. Its policies focused mainly on creating a leveled ground for crypto stakeholders.
Gita Gopinath, IMF’s chief economist, is against the idea of a crypto ban. The economist believes that regulating the sector would be a better idea.
Gopinath believes that this regulation would help protect the rights of investors. She made this statement following the recent meltdown in the crypto market.
Several investors have lost millions of dollars owing to fraudulent schemes by certain crypto institutions. As a result, several regulators are taking the issue of regulation seriously.